Alexandria, VA Estate Planning Blog

The following analysis pertains to the effect of a durable power of attorney on estate planning. Although the specific jurisdiction is Florida, the same general issues (not the law) may apply.

Sometimes its nice to read other attorney's analysis on certain aspects of the law. I have pasted below a Florida attorney's analysis of their law. I don't certify the validity of the attorney's analysis, but I find it interesting.

In October of 2011, Florida amended its Power of Attorney Act under Section 709 . . . Notably, under section 709.2202, the new act provided additional safeguards regarding the agent’s ability to exercise special powers. In order for the principal to grant certain powers to the agent, the former must sign or initial next to each special power and such power cannot be prohibited by another agreement. Fla. Stat. Ann. § 709.2202 (2011). For example, where a mother seeks to grant the specific authority for her son to create a trust, gift property, or disclaim assets on her behalf, the former must initial next to every enumerated power for the latter to exercise such powers. In all, 709.2202 vests broad powers for an agent to materially affect the principal’s estate plan.

Problems may arise in the following contexts: (1) although the power of attorney grants the agent the ability to make gifts or amend the principal’s trust, the trust instrument itself may prohibit such powers, (2) the agent may wish to make certain changes on the advice of those who may not be competent to render advice regarding the principal’s dispositive plan, and (3) the agent’s proposed changes directly conflict with the trust drafting attorney’s design plan. The following may be helpful to sidestep such issues to ensure a proper balance exists between the agent’s fiduciary responsibility of making necessary estate plan changes and the need to protect a settlor’s current estate plan.

Problem #1: First, in drafting the trust, the attorney should inquire as to whether an outstanding power of attorney exists and whether it contains special powers that, if used, can have a substantial impact on an estate plan. If such powers are present, the drafting attorney should determine whether the principal intended to grant such broad powers to the agent and whether the trust document should either prohibit or limit the agent’s powers. Also, the power of attorney may need to be revoked to conform to the settlor’s/principal’s intent. While drafting a trust for a client, knowing whether a Power of Attorney exists and exactly what type of powers it conveys will ensure that a client’s estate plan remains consistent.

Problem #2 & #3: The drafting attorney should have a candid discussion with the principal/settlor to determine whether the agent is the proper person to hold such powers. For example, the power of attorney can be drafted in a way to appoint co-agents which can only act upon the concurrence of both. Fla. Stat. Ann. § 709.2111 (2011). Similarly, if properly counseled, an agent can limit his authority by not acting upon the powers conferred to her regarding modifying a principal’s estate plan. Regarding #3, it would be wise for an agent or someone who advises the agent to discuss the potential repercussions of any proposed changes with the principal’s estate planning attorney. Since the agent is bound by fiduciary standards especially in exercising powers delineated under 709.2202, the agent may have a duty to confer with the settlor’s counsel prior to making any material changes to a trust.

A Power of Attorney that allows one to change a principal’s dispositive scheme is a powerful tool. Attorneys should be cautious when inserting section 709’s estate planning powers to ensure that principals are aware of the powers they are conveying. Further, Power of Attorney and trust documents should be drafted or amended to be consistent with the principal’s/settlor’s estate plan.

*The above is for informational and educational purposes only and is not intended to provide specific advice to any such persons. Please seek a qualified attorney in your area to discuss specific facts and how the applicable laws in your area apply.""